Countries in Asia are increasingly embracing renewable energy, according to Mr Sam Liu, head of Renewable Energy, Asia at WTW, a leading global advisory, broking, and solutions company.
“We anticipate a continued surge in investments in 2024, particularly within the Southeast Asia region with countries setting ambitious targets to meet their net-zero emission goals,” he said.
Mr Liu added, “We are also seeing increasing cross-border projects being announced to import and export electricity within the region. However, challenges remain for these projects, such as cross-border regulations and complex transmission facilities, including subsea cables and financing. There has also been a shift to develop more hybrid projects to increase reliability and grid stability, and optimise resource utilisation. However, this also increases the interfacing risks between the different technologies.
“Nevertheless, insurance market capacity remains stable with new entrants entering the sector. We still expect the tightening of insurance capacities and coverages for emerging technologies and natural catastrophe risks which remain to be the key underwriting concerns due to large losses happening globally.
“The ongoing competition and potential for a La Niña year keep rates steady, with parametric solutions gaining traction despite integration challenges. To capitalise on emerging opportunities, renewable energy risk and insurance buyers should continue to engage with risk advisors and insurers, employing smarter solutions to navigate the complexities of the evolving landscape.”
Resilient renewable energy sector
Mr Liu’s comments were made in connection with WTW’s publication Renewable Energy Market Review 2024 published yesterday. The review, titled “Prepare for storms, plan for stability”, says that the renewable energy sector has shown resilience and optimism in 2024 despite facing constraints such as climate issues, supply chain disruption, casualty deterioration, social inflation, and geopolitical conflicts.
However, overall profitability remains challenging due to variable results within energy classes.
Several key trends are explored in this year's review:
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El Niño & La Niña effect and climate volatility: unpredictable weather patterns continue to challenge the renewable market, with significant natural catastrophe losses and an unprecedented number of individual weather events exceeding $1bn.
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Supply chain instability: four years post-COVID-19 pandemic, global supply chains remain unstable, influencing lead times for critical items and assessments of asset reinstatement and business interruption risk.
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Technological advancements and market response: the renewable energy sector is seeing rapid growth in large wind turbines, floating solar installations, green hydrogen, and utility-scale battery energy storage systems, prompting markets to innovate and adapt their strategies.
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Energy storage innovations: lithium-ion batteries and green hydrogen are ushering in a new era of energy storage, driving a renaissance in well-known technologies such as hydroelectric pumped storage.
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Resource skills gap: the renewable energy insurance market faces a major challenge in resource skills, requiring the transfer of skills from traditional energy sectors to support the transition to low-carbon infrastructure.
The complete report can be downloaded here.